Thursday, November 29, 2018

22 Days in Paul Krugman's Masterclass (Day 11) (Krugman as a Taxaholic)

In this lesson, Krugman proves himself to be a taxaholic to the degree that he stumbles around in the lesson and doesn't seem to realize his own obvious pro-tax incoherence.

At one point, he mocks the idea that taxes are a disincentive and says anyone who thinks they are a disincentive should go "walk around Denmark."

But less than a minute later he says that "even liberals admit there are some disincentives to taxes."

Krugman then states that it would be entirely possible in total "to tax the rich in the 70% to 80% range" but then says. "You can only get so much money out of the rich."

He says that on top of taxing the rich, he would like to keep current tax levels for all and add "a modest VAT on top of the current system."

He then goes dishonest and says that the country worked just fine after World War 2 with a top tax bracket of 91%, but he fails to mention that there were many deductions and loopholes that resulted in hardly anyone paying close to 91%.

There is a common misconception that high-income Americans are not paying much in taxes compared to what they used to. Proponents of this view often point to the 1950s, when the top federal income tax rate was 91 percent for most of the decade. However, despite these high marginal rates, the top 1 percent of taxpayers in the 1950s only paid about 42 percent of their income in taxes...

In fact, the situation is even stranger. The 42.0 percent tax rate on the top 1 percent takes into account all taxes levied by federal, state, and local governments, including: income, payroll, corporate, excise, property, and estate taxes. When we look at income taxes specifically, the top 1 percent of taxpayers paid an average effective rate of only 16.9 percent in income taxes during the 1950s...

All in all, the idea that high-income Americans in the 1950s paid much more of their income in taxes should be abandoned.

Krugman just lied. The Nobel Prize winner has to be aware of what went really went on taxwise after World War 2.

Then Krugman closes by showing how higher taxes intoxicated he is by saying that "Taxes don't matter that much" and "We shouldn't be talking that much about taxes."

With a smile he closes with this:

Taxes shouldn't be in the top 5 things in economic policy that we should be talking about.

No. for him, it is all about raising taxes and just not discussing it at all.

-RWLinks to discussions of all Krugman's Masterclass lessons are here.